UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange
act of 1934
For the quarterly period ended March 31, 1999
----------------
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from ______________________________________________
Commission file number __ 333-08929____________________
UNION FINANCIAL SERVICES-1, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 86-0817755
------------- ----------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1801 California Street, Suite 3920, Denver, Colorado 80202
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 292-6930
---------------------
(Registrant's telephone number, including area code)
6991 East Camelback Road, Suite B290, Scottsdale, Arizona 85251
-----------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class of Stock Amount Outstanding
--------------- ------------------
Common Stock, No par value 1,000 Shares of Common Stock
as of May 1, 1999
1
<PAGE>
UNION FINANCIAL SERVICES-1, INC.
INDEX
Page No.
--------
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 1999 and
December 31, 1998..............................................3
Statements of Operations for the three months ended
March 31, 1999 and 1998........................................4
Statements of Stockholder's Equity for the three
months ended March 31, 1999....................................5
Statements of Cash Flows for the three months ended
March 31, 1999 and 1998........................................6
Note to Financial Statements.....................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................................8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.......11
PART II. - OTHER INFORMATION
Item 1.Legal Proceedings.................................................12
Item 2.Changes in Securities.............................................12
Item 3.Defaults upon Senior Securities...................................12
Item 4.Submission of Matters to a Vote
of Security Holders........................................12
Item 5.Other Information.................................................12
Item 6.Exhibits and Reports on Form 8-K..................................12
2
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UNION FINANCIAL SERVICES-1, INC.
BALANCE SHEETS
March 31, 1999 (Unaudited) and December 31, 1998
- --------------------------------------------------------------------------------
ASSETS March 31, December 31,
1999 1998
(Unaudited)
----------------- -------------
Cash and cash equivalents $ 93,218,085 $ 664,815,085
Student loans receivable including net premiums, 1,208,633,005 639,740,073
net of allowance for loan losses
Accrued interest receivable 21,458,021 11,110,808
Debt issuance cost, net of accumulated amortization 6,772,360 6,698,845
Other assets 178,228 199,506
------------- -------------
Total assets $1,330,259,699 $1,322,564,317
============= =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Notes payable $1,316,500,000 $1,316,500,000
Accrued interest payable 4,108,895 3,725,622
Income taxes payable 1,523,384 146,270
Other liabilities 2,871,946 1,139,945
------------- -------------
Total liabilities $1,325,004,225 $1,321,511,837
============= =============
Stockholder's equity:
Common stock, no par value.
Authorized 1,000 shares;
issued and outstanding 1,000 shares $ 1,000 $ 1,000
Additional paid in capital 1,920,000 --
Retained earnings 3,334,474 1,051,480
------------ ------------
Total stockholder's equity 5,255,474 1,052,480
------------ -----------
Total liabilities and
stockholder's equity $1,330,259,699 $1,322,564,317
============= =============
See accompanying note to financial statements.
3
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UNION FINANCIAL SERVICES-1, INC.
STATEMENTS OF OPERATIONS
Three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
---- ----
Revenues:
Loan interest $25,069,653 $10,722,682
Investment interest 1,631,371 359,177
Other 71,385 11,227
----------- -----------
Total revenues 26,772,409 11,093,086
========== ==========
Expenses:
Interest on notes 16,279,782 8,257,636
Loan servicing 2,636,891 1,324,182
Financing fees to parent 460,084 231,212
Trustee and broker fees 486,274 227,133
Amortization of debt issuance costs 319,770 124,387
Amortization of loan premiums 1,363,700 376,826
Other general and administrative 1,581,864 433,030
---------- ----------
Total expenses 23,128,365 10,974,406
========== ==========
Income before income taxes 3,644,044 118,680
Income tax expense 1,361,050 43,318
---------- -----------
Net income $ 2,282,994 $ 75,362
========== ===========
Basic and diluted net income per common share $228.30 $75.36
====== =====
4
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<TABLE>
<CAPTION>
UNION FINANCIAL SERVICES-1, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
Three months ended March 31, 1999 (Unaudited)
ADDITIONAL TOTAL
COMMON PAID IN RETAINED STOCKHOLDER'S
STOCK CAPITAL EARNINGS EQUITY
----------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Balances at December 31, 1998 $1,000 $1,051,480 $1,052,480
Capital contribution from Parent $1,920,000 1,920,000
Net income, three months ended March 31,
1999 (Unaudited) 2,282,994 2,282,994
------ ----------- --------- ---------
Balance at March 31, 1999 (Unaudited) $1,000 $1,920,000 $3,334,474 $5,255,474
===== ========= ========= =========
See accompanying note to financial statements.
</TABLE>
5
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<TABLE>
<CAPTION>
UNION FINANCIAL SERVICES-1, INC.
STATEMENTS OF CASH FLOWS
Three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
---- ----
<S> <C> <C>
Net Income $ 2,282,994 $ 75,362
Adjustments to reconcile net income to net cash
used in operating activities:
Amortization 1,683,470 501,213
(Decrease) increase in accrued interest receivable (10,347,213) (817,506)
(Increase) decrease in other assets 21,278 (2,990)
Provision for loan losses, net of charge offs 54,385 107,796
Increase in accrued interest payable 383,273 10,545
Decrease in other liabilities 1,732,001 (408,405)
Decrease in income taxes payable 1,377,114 (393,430)
---------- ---------
Net cash used in operating activities $ (2,812,698) $ (927,415)
=========== ==========
Cash flows used in investing activities:
Purchase of student loans, including premiums (613,059,305) (35,429,570)
Proceeds from sale of student loans 5,366,729 --
Net proceeds from student loan principal
payments and loan consolidations 37,381,560 14,956,251
------------ ----------
Net cash used in investing activities $(570,311,016) $(20,473,319)
=========== ==========
Cash flows provided by financing activities:
Capital contribution from Parent 1,920,000 --
Payment for debt issuance costs (393,286) --
----------- ----------
Net cash provided by financing activities 1,526,714 --
=========== ==========
Net decrease in cash and cash equivalents (571,597,000) (21,400,734)
Cash and cash equivalents, beginning of period 664,815,085 37,542,382
----------- ----------
Cash and cash equivalents, end of period $ 93,218,085 $18,141,647
=========== ==========
See accompanying note to financial statements.
</TABLE>
6
<PAGE>
UNION FINANCIAL SERVICES - 1, INC.
NOTE TO FINANCIAL STATEMENTS (Unaudited)
March 31, 1999
(1) BASIS OF PRESENTATION
The accompanying financial statements of Union Financial Services-1, Inc.
(the "Company") have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC") and, in the opinion of management,
include all adjustments necessary for a fair statement of income for each period
shown. All such adjustments made are of a normal recurring nature, except when
noted as extraordinary or nonrecurring. The balance sheet at December 31, 1998
is derived from the audited balance sheet as of that date. All other financial
statements are unaudited. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such SEC rules
and regulations. Management believes that the disclosures made are adequate and
that the information is fairly presented. The results for the interim periods
are not necessarily indicative of the results for the full year. These financial
statements should be read in conjunction with the financial statements and notes
thereto in the Company's Annual Report on Form 10-K, which are incorporated by
reference.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
General
The Company was formed on February 28, 1996 solely for the purpose of
acquiring, holding and selling from time to time, student loans originated under
the Federal Family Education Loan Program created by the Higher Education Act of
1964. The Company finances its purchases of student loans through the issuance
of student loan asset-backed notes (the "Notes"). Since its inception, the
Company has issued five (5) series of Notes consisting of seventeen (17)
classes. The Notes are limited obligations of the Company secured solely by the
student loans and other assets in the trust estate created by the Indenture of
Trust governing the issuance of the Notes.
The assets of the Company consist primarily of student loans. At
December 31, 1998, the Company held approximately $631 million in student loans.
On January 4, 1999, the Company purchased approximately $622 million of student
loans, including approximately $8.7 million of purchased interest and $14.9
million of loan premiums. Approximately $399 million of those loans were
purchased from related parties at prices equivalent to those available in the
market.
Results of Operations
Three months ended March 31, 1999 compared to three months ended March 31, 1998.
Revenues. Revenues for the three months ended March 31, 1999, consisted
primarily of interest earned on student loans. Revenues from interest on
student loans increased by $14,346,971 from $10,722,682 for the three months
ended March 31, 1998 to $25,069,653 for the three months ended March 31, 1999.
The increase in revenues is attributable to the acquisition of additional
student loans by the Company during the period. The amount of interest reported
for the three months ended March 31, 1999 was derived from student loans in an
aggregate principal amount of approximately $1,219,561,000. The Company's
average net investment in student loans during the three months ended March 31,
1999 and March 31, 1998 was approximately $1,204,834,002 and $520,408,000,
respectively (excluding funds held by the Trustee) and the average effective
annual interest rate of interest income on student loans during the three months
ended March 31, 1999 and March 31, 1998 was approximately 8.32% and 8.24%,
respectively. The Company also received investment income and other income in
the amounts of $1,631,371 and $71,385, respectively, for the three months ended
March 31, 1999 and $359,177 and $11,227, respectively, for the three months
ended March 31, 1998.
8
<PAGE>
Expenses. The Company's expenses consist primarily of interest due on the
Company's outstanding Notes. Expenses from interest due on the Company's
outstanding Notes increased by $8,022,146 from $8,257,636 for the three months
ended March 31, 1998 to $16,279,782 for the three months ended March 31, 1999.
This increase in expenses is attributable to the issuance of additional Notes in
the fourth quarter of 1998. For the three months ended March 31, 1999 and March
31, 1998, the Company's average debt outstanding was approximately
$1,316,500,000 and $571,500,000, respectively, and the average annual cost of
borrowings was approximately 4.95% and 5.78%, respectively. The Company also
made payments for loan servicing fees to Union Bank and financing fees to its
parent company, Union Financial Services, Inc., in the amount of $2,636,891 and
$160,084, respectively, for the three months ended March 31, 1999 as compared to
$1,324,182 and $231,212 respectively, for the three months ended March 31, 1998.
The increase in loan servicing fees is the result of the servicing of additional
student loans and the decrease in financing fees is directly related to reduced
financing activity. Income tax expense amounted to $1,361,050 for the three
months ended March 31, 1999 compared to $43,318 for the three months ended March
31, 1998. The increase in tax expense was a result of higher net income for the
three months ended March 31, 1999.
Net Income. The Company had net income of $2,282,994 for the three
months ended March 31, 1999 and $75,362 for the three months ended March 31,
1998.
For the three months ended March 31, 1999, there were no unusual or
infrequent events or transactions or any significant economic dangers that
materially affected the amount of reported income.
Liquidity and Capital Resources
Student loans held by the Company are pledged as collateral for the Notes,
under an Indenture of Trust, the terms of which provide for the retirement of
all Notes from the proceeds of the student loans. Cash flows from payments on
the student loans, together with proceeds of reinvestment income earned on the
student loans, are intended to provide cash sufficient to make all required
payments of principal and interest on each outstanding series of the Notes. If
current revenues are insufficient to pay principal and interest due on the
Notes, money in the Reserve Fund created under the Indenture is available for
payment of amounts due. The Reserve Fund is fully funded under the terms of the
Indenture.
It is anticipated that regular payments under the terms of the student
loans, as well as early prepayment, will reduce the number of student loans held
in the trust estate created under the Indenture. The Company is authorized under
the Indenture to use principal receipts from student loans to purchase
additional student loans until April 1, 2002. Thereafter, principal receipts
from student loans will be used to redeem Notes. The Company also plans to issue
additional Notes the proceeds of which will be used to acquire additional
student loans.
Year 2000 Compliance.
We cannot now determine whether the Year 2000 issue will have a material
adverse effect on our business operations. The conduct of our business in
relationship to purchasing loans or administering the loans we own is not
significantly dependent on our own computer programs. However, our loan
servicers, Indenture Trustee, the Guarantee Agencies guaranteeing our student
loans, and the Department of Education all rely heavily on computer programs and
systems for processing transactions related to student loans.
9
<PAGE>
We have made inquiry of the Indenture Trustee, and the servicer and
subsubservicer of our loans concerning the Year 2000 issue, and have received
assurances that they are, or are working to become, Year 2000 compliant. We are
aware that the Guarantee Agencies and Department of Education are working to
address the Year 2000 issue. The Department of Education has indicated that all
of its data systems are Year 2000 compliant. However, we cannot provide any
assurance that the Department of Education, the Guarantee Agencies, the
Indenture Trustee or the servicer or subservicer will not be adversely affected
by the arrival of the Year 2000. We cannot influence or control the efforts of
third parties to address the Year 2000 issue, nor can we terminate our
dependence on the servicer, subservicer, Guarantee Agencies or Department of
Education. Under the reasonably likely worst case scenario, the arrival of the
Year 2000 could delay our receipt of principal and interest payments on our
student loans and the receipt of claims payments from the Guarantee Agencies. If
that delay continues for a prolonged period, we may be unable to make timely
payments of principal and interest due on our Notes.
10
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's assets consist almost entirely of student loans. Those
student loans are subject to market risk in that the cash flows generated by the
student loans can be affected by changes in interest rates. The student loans
generally bear interest at a rate equal to the average bond equivalent rates of
weekly auctions of 91-day Treasury bills (the "91 day Treasury Bill Rate") plus
a margin specified for each student loan. Thus, if interest rates generally
increase, the Company would expect to receive greater interest payments on its
student loans, and if interest rates generally decrease, the Company would
expect the interest payments it receives to be reduced. The Company does not
hold any of its assets for trading purposes.
The Company attempts to manage its interest rate risk by funding its
portfolio of student loans with variable rate debt instruments. The majority of
the Notes bear interest at a rate that is reset periodically by means of auction
procedures, or by reference to the London Interbank Offered Rate ("LIBOR") or a
specified Treasury rate, plus an applicable margin. By funding the, student
loans with variable rate Notes, the Company attempts to maintain a positive
"spread" between the interest earned on its student loans and its interest
payment obligations under the Notes. Thus, in an environment of generally
declining interest rates, the Company should receive lower interest payments on
its student loans, but the interest payments due on the Notes should also be
lower.
The interest rates on each series of Auction Rate Notes is based generally
on the outcome of each auction of such series of Notes. The interest rates on
each series of LIBOR Rate Notes and Treasury Rate Notes is based generally on
the LIBOR Rate or Treasury Rate then in effect for the applicable interest rate
period. The student loans, however, generally bear interest at the 91-day
Treasury Bill Rate plus margins specified for such student loans. As a result of
the differences between the indices used to determine the interest rates on
student loans and the interest rates on the Notes, there could be periods of
time when the rates on student loans are inadequate to generate sufficient cash
flow to cover the interest on the Notes and the expenses required to be paid
under the Indenture. In a period of rapidly rising interest rates, the interest
rates on student loans may not increase as quickly as the variable interest
rates with respect to the Notes. Further, LIBOR or auction rates may rise more
quickly than the 91-day Treasury Bill Rate. If there is a decline in the rates
on student loans, the funds deposited into the trust estate created under the
Indenture may be reduced and, even if there is a similar reduction in the
variable interest rates applicable to any series of Notes, there may not
necessarily be a similar reduction in the other amounts required to be paid out
of such funds (such as administrative expenses).
The Company has conducted a sensitivity analysis to determine what
effect differing changes of the interest rates on student loans and the Notes
would be on its cash flows and its resulting ability to pay the principal and
interest due on the Notes.
The Company's management case cash flow was prepared assuming a 60 basis
point spread between Treasury bills and LIBOR. In this analysis the net present
value of the estimated issuer withdrawals at the five-year treasury bill rate on
December 15th, 1999 (4.34%) plus 100 basis points was $27,132,810. When this
spread was increased by 10 basis points to 70, the net present value of the cash
flow was reduced to $23,543,053, or a reduction of $3,589,757 of the estimated
issuer withdrawals.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
By written consent in lieu of meeting dated March 11, 1999, the
Company's sole shareholder reelected Messrs: Dunlap, Butterfield, Page,
Wilcox and Hoff as directors of the Company.
ITEM 5. OTHER INFORMATION.
None
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following is a complete list of exhibits filed as part of this Form
10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601
of Regulation S-K.
Exhibit No. Description Location
- ---------------- --------------------------------------------------- -----------
3.1 Articles of Incorporation of the Company *
3.2 Bylaws of the Company *
4.1 Second Amended and Restate Indenture by and between the ***
Company and Norwest Bank Minnesota, N.A.
4.2 Series 1996C Supplemental Indenture by and between the Company ***
and Norwest Bank Minnesota, N.A.
4.2.1 1998 Supplemental Indenture by and between the Company and ****
Zions First National Bank
10.1 Administrative Services Agreement, dated as of August 1, 1996, **
by and between Union Financial Services, Inc. and the Company
10.1.1 Amendment to Administrative Services Agreement, dated as of **
November 1, 1996, by and between Union Financial Services, Inc.
and the Company
10.2 Amended and Restated Servicing Agreement, dated as of June 19, **
1996, by and between Union Bank and Trust Company and the
Company
10.2.1 Second Amended and Restated Servicing Agreement, dated as of *****
December 18, 1998 by and between Union Bank and Trust
Company and the Company
27.1 Financial Data Schedule *****
- --------------------
* Incorporated by reference herein to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996.
** Incorporated by reference herein to the Company's Registration
Statement on Form S-3 (File No. 333-28551).
*** Incorporated by reference herein to the Company's current report on Form
8-K, filed January 7, 1997.
**** Incorporated by reference herein to the Company's current report on Form
8-K, filed January 6, 1999.
***** Filed herewith.
Reports on Form 8-K
The Company filed reports on Form 8-K during the three months covered
by this report:
o Current report on Form 8-K, filed January 6, 1999, containing
copies of an Underwriting Agreement between Union Financial
Services-1, Inc. and Salomon Smith Barney, LLC dated as of
December 16, 1998 and the 1998 Supplement Indenture of Trust by
and between Union Financial Services-1, Inc. and Zions First
National Bank.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
UNION FINANCIAL SERVICES-1, INC.
By:/s/ Stephen F. Butterfield
----------------------------------------
Stephen F. Butterfield, President
(Principal Executive Officer)
By:/s/ Ronald W. Page
----------------------------------------
Ronald W. Page, Vice President (Principal
Financial and Accounting Officer)
Date: May 14, 1999
14
SECOND AMENDED AND RESTATED SERVICING AGREEMENT
THIS SECOND AMENDED AND RESTATED SERVICING AGREEMENT (the "Agreement")
entered into and effective as of the 18th day of December, 1998, by and between
UNION BANK AND TRUST COMPANY, a Nebraska banking corporation ("Union Bank"), and
UNION FINANCIAL SERVICES-1, Inc., a Nevada corporation ("UFS-1").
WHEREAS, Union Bank's subsidiary, UNIPAC Service Corporation, and Union
Bank's affiliate, InTuition, Inc. (collectively, "Servicer"), as subservicing
agent, are in the business of servicing loans which are made and guaranteed in
accordance with the provisions of the Higher Education Act of 1965, as amended
(the "Education Act") (references hereinafter to the "Education Act" include
rules and regulations promulgated thereunder as in effect from time to time);
and
WHEREAS, Servicer has developed and/or has available to it the systems
and services to enable it to process and service Education Loans in accordance
with the Education Act, and those guarantee agencies as are satisfactory to
Servicer ("Guarantor(s)"); and
WHEREAS, Servicer has developed and/or has available to it the systems
and services to enable it to process and service Education Loans in accordance
with the Rules and Regulations (the "Regulations") promulgated by Guarantor
(references hereinafter to the "Regulations" include Rules and Regulations
promulgated thereunder as in effect from time to time); and
WHEREAS, UFS-1 acquires student loans made and guaranteed under the
Education Act ("Education Loans"); and
WHEREAS, UFS-1 desires to retain Union Bank to cause InTuition, Inc. to
process and service UFS-1's Education Loans, which are acquired from InTuition
Holdings, Inc. in the future, and for InTuition, Inc. to act as subservicer
under the terms of that certain Loan Servicing Agreement between Union Bank and
InTuition, Inc., dated of even date herewith (the "InTuition Servicing
Agreement"), and UFS-1 desires to retain Union Bank to cause UNIPAC Service
Corporation to process and service UFS-1's Education Loans and for UNIPAC
Service Corporation to act as subservicer under the terms of that certain UNIPAC
Service Corporation Guaranteed Student Loan Program Servicing Agreement between
Union Bank and UNIPAC Service Corporation, dated January 1, 1995, as amended
(the "UNIPAC Servicing Agreement"); and
WHEREAS, the parties hereto entered into that certain Amended and
Restated Servicing Agreement dated June 19, 1998, and the parties wish to amend
and restate such prior agreement under the terms specified herein.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties agree as follows:
1. Definitions. Capitalized terms which are not otherwise defined in
this Agreement shall have the meanings ascribed thereto in that certain Second
Amended and Restated Indenture of Trust dated as of November 1, 1996, between
Norwest Bank Minnesota, National Association as Trustee, predecessor to Zions
First National Bank as successor Trustee, and UFS-1.
<PAGE>
2. Term.
2.1 The term of the Agreement shall continue until the earlier of (i)
termination of the Indenture, (ii) early termination after material default by
Servicer as provided for in Section 16 of this Agreement, and (iii) the
Education Loans serviced under this Agreement are paid in full.
2.2 Upon the termination of this Agreement, Union Bank shall turn over
to UFS-1 all Education Loan files complete with all information contained
therein and all current computer information on the Education Loans under
service pursuant to this Agreement in such form or fashion as UFS-1 shall
reasonably specify. Union Bank and UFS-1 specifically agree that the format used
to transfer UFS-1's data contains confidential and proprietary trade secret
information which is the exclusive property of Union Bank and/or Servicer. Union
Bank makes no claim to the specific data contained in any printout given to
UFS-1 and recognizes that said data is the exclusive property of UFS-1. Union
Bank and UFS-1 agree, however, that all aspects of the underlying computer
program, algorithms, methods of processing, specific design and layout, report
format, and the unique processing techniques and interactions of the various
aspects of Union Bank's and/or Servicer's computer program are trade secrets of,
proprietary to, and owned exclusively by Union Bank and/or Servicer. At such
deconversion, a minimum fee of $12.00 per account plus any other reasonable
expenses incurred in connection with the transfer of such files and other
information shall be paid by UFS-1; provided however, that in the event
deconversion results from early termination of this Agreement under Section 16
hereof due to the breach by Union Bank, UFS-1 shall pay only the actual expenses
incurred in connection with the transfer of such files and other information.
The confidentiality provisions of this paragraph shall survive any termination
or expiration of this Agreement.
3. Delivery of Completed Education Loans for Servicing and Collection.
Subject to Servicer's scheduling requirements, UFS-1 may from time to time
deliver or cause to be delivered to Servicers Education Loans with respect to
which loan processing has been completed and loan proceeds have been fully
disbursed to the student/parent borrowers prior to the date of delivery
("Completed Education Loans") to be serviced pursuant to the terms of this
Agreement. UFS-1 shall transmit to Servicer all such loan documentation as
required by Servicer to enable it to service the Completed Education Loans as
provided herein.
4. Servicing of Completed Education Loans. Upon acceptance of any
Completed Education Loan into Servicer's computer system and after the sale date
(if applicable) of the Completed Education Loan to UFS-1, Union Bank shall cause
Servicer to service such Education Loan in accordance with the Education Act,
the Regulations, and in accordance with the provisions of this Agreement,
including the following:
(a) Servicer shall take all steps necessary to maintain the Insurance on
Education Loans in full force at all times.
2
<PAGE>
(b) Servicer shall prepare and mail directly to the student/parent
borrower all required statements, notices, disclosures and demands.
(c) Servicer shall retain records of contacts, follow-ups, collection
efforts and correspondence regarding each Education Loan.
(d) Servicer shall provide accounting for all transactions related to
individual Education Loans, including, but not limited to, accounting for all
payments of principal and interest upon such Education Loans.
(e) Servicer shall process all deferments and forbearances.
(f) Servicer shall process all address changes and update address
changes accordingly.
(g) Servicer shall retain all documents received by Union Bank
pertaining to each Education Loan, including the original promissory note with
respect to each Education Loan.
(h) When necessary and allowable by the Education Act, Servicer shall
take all steps necessary to file a claim for loss with Guarantor, and shall be
responsible for all communication and contact with that agency necessary or
appropriate to accomplish the same.
(i) Servicer shall provide a Lender's Manifest of Education Loans on all
new accounts, accounts paid in full or converted to repayment, and provide any
other information required by Guarantor.
(j) Servicer shall provide such other services as Servicer customarily
provides and deems appropriate.
(k) Union Bank and UFS-1 agree that upon delivery of the original
promissory notes relating to the Education Loans to the Servicer as Custodian
pursuant to the Custodian Agreement, that each shall and does relinquish all
power and control over such promissory notes, subject to responsibilities of
Union Bank under this Agreement.
5. Additional Servicing Activities. At UFS-1's request Union Bank agrees
to cause Servicer to perform additional servicing activities not required under
the terms of this Agreement for those Education Loans transferred to Servicer as
Completed Education Loans which have not been previously serviced in accordance
with the Education Act and Regulations, and which require additional servicing
activity to attempt to maintain or reinstate the loans' principal and interest
guarantee from the Guarantor ("Cure Procedures"). Union Bank shall cause
Servicer, utilizing Cure Procedures approved by the Guarantor, to use Servicer's
best efforts to cure all defects caused by UFS-1. Union Bank makes no
representation or warranty that the guarantee on each Education Loan will be
reinstated regardless of Servicer following the Cure Procedures as approved by
the Guarantor. UFS-1 agrees to pay Union Bank those fees for Cure Services
described in Schedule A under the topic entitled "Additional Servicing
Activity".
3
<PAGE>
6. Portfolios Subject to Rejection by Union Bank. UFS-1 acknowledges
that certain loan portfolio types pose a risk of financial hardship for Servicer
to service under this Agreement. Union Bank may in its discretion, prior to
placing such loans in the Servicer's system, reject certain loans or loan
portfolios ("Rejected Loans"). Union Bank shall provide UFS-1 with reasonable
advance notice as to any Rejected Loans which Union Bank declines to place on
Servicer's system. Union Bank shall have no right to reject or decline loans
after the loans are transferred to the Servicer's system.
7. Reports to UFS-1. On or before the 15th day of each month, unless
some other time is provided herein, Union Bank shall cause Servicer to prepare
and deliver to UFS-1 and the Trustee (upon Trustee's request), or to such other
person as UFS-1 may designate, the following reports with respect to activity
during the preceding month:
(a) As of the last day of each month, an unaudited statement, in
reasonable detail, of all transactions during that month on Completed Education
Loans serviced by Servicer for UFS-1;
(b) Processing Status Report (daily);
(c) Check Register (daily);
(d) Posting Ledger (daily/monthly);
(e) Statistical Report (monthly);
(f) Loan Ledger/Alpha Report (monthly);
(g) Guarantor Manifest (monthly);
(h) Delinquency Report (daily/monthly);
(i) Claims Activity Report (monthly).
UFS-1 shall receive at no cost one copy of each of the foregoing
reports. Union Bank will cause Servicer to provide extra copies at the request
of UFS-1. UFS-1 shall reimburse Union Bank for the cost in producing such extra
copies.
8. Interest Computation. Union Bank shall cause Servicer to provide on a
quarterly basis statistical data for the computation of interest and special
allowance billable to the U.S. Department of Education for UFS-1's Education
Loans. Data will be computed commencing with the date Education Loans appear on
the records of Servicer.
4
<PAGE>
9. Service Fee to Union Bank. UFS-1 shall pay to Union Bank, on or
before the 15th day of each month, or within fifteen (15) days of billing
statement (which may be sent either by Union Bank or Servicer), for and in
consideration of the services performed by Union Bank and Servicer hereunder for
the preceding month, the fee provided for in Schedule A of this Agreement
("Servicing Fee"). The Servicing Fee shall be subject to change every twelve
(12) months. Such change shall not result in an increase that will exceed three
and one-fifth percent (3.2%) cumulatively for any twelve (12) month period. In
addition, these fees are subject to renegotiation every three years, subject to
the renegotiated fees meeting approval of the Rating Agencies. In the event the
parties cannot agree to new fees for each three year period, then either party
may terminate this Agreement upon 90 days written notice to the other. In the
event Servicing Fees are not paid within thirty (30) days of the billing
statement, UFS-1 agrees Union Bank will have the following rights to (a) impose
a late charge of one and one-half percent (1 1/2%) per month against the entire
outstanding balance of the past due Servicing Fee including any prior late
charge; and (b) terminate services without notice if nonpayment persists for
sixty (60) days from billing or more. The Servicing Fee and related charges
shall be paid only from the Trust Estate and only to the extent moneys are
available in the Revenue Fund as provided for under the terms of the Indenture.
The parties agree that should Servicer be required to make material
changes to its current servicing practices or servicing system due to changes to
the Education Act, Regulations, and/or business environment, or to other costs
beyond Union Bank's control, including but not limited to postal fees, Union
Bank may renegotiate the Servicing Fees with UFS-1 to reasonably reflect those
increased costs at any time during the term of this Agreement.
10. Loan Payments. Student/parent borrowers will make all loan payments
to a third party lockbox established by Servicer. All cash receipts will be
remitted once a week to the Trustee for deposit into the Student Loan Holding
Fund.
11. Disclosure of Information. All data, information, records,
correspondence, reports or other documentation received by Union Bank or
Servicer pursuant to this Agreement from UFS-1 or the school which the student
attended or from the student/parent borrower, or prepared and maintained by
Union Bank or Servicer in the course of its activities under this Agreement
shall be released or divulged only to UFS-1 and the Trustee, or with respect to
information or documents relating to a particular student/parent borrower, to
that student/parent borrower, or to such other parties as Union Bank or Servicer
may be directed in writing by UFS-1 or such student/parent borrower.
12. Intellectual Property Protection. Notwithstanding anything in this
Agreement to the contrary, it is the express intention of the parties to this
Agreement that all right, title and interest of whatever nature in Union Bank's
and/or Servicer's user manuals, training materials, all computer programs,
routines, structures, layout, report formats, together with all subsequent
versions, enhancements and supplements to said programs, all copyright rights
(including both source and object code) and all oral or written information
relating to Union Bank's and/or Servicer's programs conveyed in confidence by
Union Bank or Servicer to UFS-1 pursuant to this Agreement which is not
generally known to the public and which give Union Bank or Servicer an advantage
over its competitors who do not know or use such information (hereinafter
collectively referred to as "Trade Secrets"), and all other forms of
intellectual property of whatever nature is and shall remain the sole and
exclusive property of Union Bank and/or Servicer.
5
<PAGE>
13. Inquiries. Union Bank shall answer or shall cause Servicer to answer
all inquiries received by it pertaining to Education Loans, school status or
refunds, and UFS-1 shall cooperate to the extent necessary to gather the
information needed to answer such inquiries. Such inquiries may be referred to
the school which the Student Borrower attended or is attending, if necessary.
Neither Union Bank nor Servicer shall have any responsibility for any disputes
between student/parent borrowers and schools regarding tuition, registration,
attendance, or quality of education/training.
14. Agent Authorization. UFS-1 hereby authorizes Union Bank and Servicer
to act on behalf of and as UFS-1's agent in the servicing of UFS-1's Education
Loans. Such authorization will include but not be limited to all correspondence
and liaison necessary with Guarantor regarding UFS-1's Education Loans,
assignment of claims to Guarantor and any/or all other communications,
correspondence, signatures or other acts appropriate to service UFS-1's
Education Loans in accordance with the Education Act and/or Regulations.
15. Liability of Union Bank and Servicer. Union Bank and Servicer assume
no responsibility or liability for failure of UFS-1 to exercise reasonable care
or due diligence and the results thereof, in making or servicing an Education
Loan prior to placing of the Education Loan on Servicer's system and prior to
the date UFS-1 holds ownership of the Education Loan. Union Bank and Servicer
also assume no liability for the failure of any student/parent borrower to repay
his or her loan, nor the failure of the United States government to pay any
principal, interest, subsidy or special allowance, nor for the failure of
Guarantor to make payment of any principal and/or interest on any of UFS-1's
Education Loans. Union Bank and Servicer shall not be responsible for
consequences of unreasonable acts of any Guarantor. In the event Servicer shall
take any action or fail to take any action which causes any Education Loan in
UFS-1's portfolio to be denied the benefit of any applicable guarantee, Union
Bank and Servicer shall have a reasonable time to cause the benefits of the
guarantee to be reinstated. If the guarantee is not reinstated within twelve
(12) months of denial by Guarantor, Union Bank shall cause Servicer to pay UFS-1
an amount equal to the outstanding principal balance plus all accrued interest
and other fees due on the Education Loan to the date of purchase, less the
amount subject to UFS-1 Risk Sharing under the Education Act and Regulations,
and thereupon Servicer shall be subrogated to all rights of UFS-1 respecting the
applicable Education Loan, including without limitation the right to collect on
the Education Loan, the right to federal subsidies, and agency authorization to
litigate in accordance with the Subrogation Agreement with Servicer. In such
event, UFS-1 agrees to perform such further acts as shall be necessary or
appropriate to subrogate the Education Loan to Servicer. For any subrogated
Education Loan for which the guarantee is fully reinstated by Guarantor, UFS-1
shall pay Servicer an amount equal to the then outstanding principle balance
plus all accrued interest due thereon, less the amount subject to UFS-1 Risk
Sharing under the Education Act and Regulations, whereupon the subrogation
rights of Servicer shall terminate. In such event, Union Bank agrees to cause
Servicer to perform such further acts as shall be necessary or appropriate to
reconvey the Education Loan to UFS-1. It is hereby acknowledged that Union Bank
shall not be performing any of the servicing activities described in this
Agreement, and that Servicer shall be responsible for performance of all such
servicing duties. As such, Union Bank shall have no liability of any nature
whatsoever arising out of or in connection with this Agreement for any negligent
or wrongful act or omission on the part of Servicer; provided, however, that
Union Bank hereby assigns, transfers and sets over unto UFS-1 all of Union
Bank's rights and remedies against Servicer as they pertain to UFS-1's Education
Loans.
6
<PAGE>
16. Termination Option. If at any time during the term of this Agreement
either party refuses or fails to perform in a material fashion any portion of
this Agreement, and fails or refuses to correct said action or lack of action
within thirty (30) days after receipt of written notice, the other party may,
upon thirty (30) days written notice, terminate this Agreement. Without limiting
the generality of the foregoing sentence, the following shall be deemed as
failure or refusal to perform in a material fashion: (i) failure by Servicer to
make deposits to the Trustee of payments received with respect to the Education
Loans, (ii) failure to perform or observe in any material respect any covenants
or agreements contained herein, or (iii) becoming subject to an insolvency or
receivership proceeding.
17. Indemnification. UFS-1 shall indemnify and hold Union Bank and/or
Servicer harmless from and against all claims, liabilities, losses, damages,
costs and expenses (including reasonable attorney's fees) asserted against or
incurred by Union Bank and/or Servicer as a result of Union Bank and/or Servicer
complying with any instruction or directive by UFS-1 and Union Bank and/or
Servicer shall in like manner indemnify UFS-1 for any miscompliance with any
such instruction or directive by Union Bank. UFS-1 shall further indemnify and
hold Union Bank and/or Servicer harmless from and against all claims,
liabilities, losses, damages, costs and expenses (including reasonable
attorney's fees) asserted against or incurred by Union Bank and/or Servicer as a
result of actions not the fault of or not caused by a negligent act of Union
Bank and/or Servicer, and their respective agents or employees, including all
claims, liabilities, losses, damages and costs caused by or the fault of UFS-1,
a prior holder, owner or UFS-1, a prior servicer or any other party connected in
any manner to the loan or loans resulting in the claim, liability, loss, damage
or cost.
18. Statute of Limitations. Any action for the breach of any provisions
of this Agreement shall be commenced within one (1) year after the Education
Loan leaves the Servicer's servicing system.
19. Governing Law. This Agreement is executed and delivered within the
State of Colorado, and the parties hereto agree that it shall be construed,
interpreted and applied in accordance with the laws of that State, and that the
courts and authorities within the State of Colorado shall have sole jurisdiction
and venue over all controversies which may arise with respect to the execution,
interpretation and compliance with this Agreement.
20. Changes In Writing. This Agreement, including this provision hereof,
shall not be modified or changed in any manner except only by a writing signed
by all parties hereto.
21. Severability. In the event a court of competent jurisdiction finds
any of the provisions of this Agreement to be so overly broad as to be
unenforceable or invalid for any other reason, it is the parties' intent that
such invalid provisions be reduced in scope or eliminated by the court, but only
to the extent deemed necessary by the court to render the provisions of this
Agreement reasonable and enforceable.
7
<PAGE>
22. Persons Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their legal representatives, heirs, successors
and assigns.
23. Assignment. This Agreement shall not be assigned by either party
without the prior written consent of the other party which consent shall not be
unreasonably withheld; provided, however, that UFS-1 may assign this Agreement
to the Trustee subject to the terms of Section 32 hereof, and Union Bank may
assign this Agreement to Servicer.
24. Mutual Release. Each of the parties to this Agreement releases the
other party from any and all claims, or causes of the other arising from any
event or transaction occurring prior to the execution of this Agreement. This
release is an independent covenant between the parties, and will survive any
termination of this Agreement.
25. Titles. The titles used in this Agreement are intended for
convenience and reference only. They are not intended and shall not be construed
to be a substantive part of this Agreement or in any other way to affect the
validity, construction or effect of any of the provisions of this Agreement.
26. Waiver. The waiver or failure of either party to exercise in any
respect any right provided for herein shall not be deemed a waiver of any
further right hereunder.
27. Continuity of Loan Servicing.
27.1 UFS-1 hereby agrees that it will ensure that all Education Loans
acquired, held, or sold by UFS-1 under the Act and subject to this Agreement
will remain with the Servicer for the full term of this Agreement.
27.2 In the event UFS-1 desires to sell any of its Education Loans,
UFS-1 will first attempt to sell the Education Loans to an eligible lender
maintaining an agreement with Servicer, in order for the sale to cause no
disruption in service, or change in Servicer for the Borrower. Should UFS-1
decide to sell its Education Loans to an eligible lender or holder which does
not maintain an agreement with Servicer and does not plan to have the Education
Loans serviced by Servicer, Union Bank is hereby granted the right to arrange
for the purchase of such Education Loans by an eligible lender or holder
maintaining an agreement with Servicer. Such purchase must be arranged within
thirty (30) days following the notice by UFS-1 if its intent to sell such
Education Loans, which notice must include sufficient information with respect
to the Education Loans to be sold. Union Bank has the right to arrange for the
sale of such Education Loans, provided Union Bank is able to arrange for the
sale of the Education Loans offering the same terms secured by UFS-1 in its
efforts to sell such Education Loans, subject to the continuing servicing rights
granted to Servicer.
27.3 Sections 27.1 and 27.2 do not apply in the event of Union Bank's
breach or default hereunder, or with respect to a sale of the Education Loan to
a holder of other loans for the same borrower.
8
<PAGE>
27.4 The intent of this Section 27 is to assure that every Education
Loan will remain with Servicer for servicing for the life of the loan.
28. Removal Fee. Should UFS-1 remove any of its Education Loans from the
Servicer system prior to a scheduled termination or breach of this Agreement,
UFS-1 agrees to pay to Union Bank a removal fee of Fifteen Dollars ($15.00) per
loan transferred off the Servicer computer system, this removal fee shall be in
addition to those charges described in Section 2.2 of this Agreement, and in
addition to damages arising from a breach of Section 27 hereof.
29. Force Majeure. The foregoing provisions of this Agreement are
subject to the following limitation: If by reason of a force majeure Union Bank
and/or Servicer is unable in whole or in part to carry out any agreement on its
part herein contained, Union Bank and Servicer shall not be deemed in default
during the continuance of such inability. The term "force majeure" as used
herein shall mean, without limitation, the following: acts of God, strikes,
lockouts, or other industrial disturbances; acts of public enemies; order or
restraint of any kind of the government of the United States of America or of
the State of Colorado or City of Aurora or any of their departments, agencies or
officials, or any civil or military authority; insurrections; riots; landslides;
earthquakes; fires; storms; droughts; floods; explosions; breakage or accident
to machinery, equipment, transmission pipes or canals; or any other cause or
event not reasonably within the control of Union Bank and/or Servicer.
30. Hiring. UFS-1 agrees that during the term of this Agreement and any
extensions or renewals thereof, and for one year thereafter, UFS-1 shall not
solicit for hire, or knowingly allow its employees to solicit for hire, any
employees of Union Bank and Servicer without the prior written consent of Union
Bank or Servicer, respectively.
31. Entire Agreement. This is the entire and exclusive statement of the
agreement between the parties, which supersedes and merges all prior proposals,
understandings and all other agreements oral and written, between the parties
relating to this Agreement.
32. Trustee as Third Party Beneficiary. This Agreement has been made and
entered into not only for the benefit of Union Bank and UFS-1 but also for the
benefit of the Trustee in connection with the financing of Eligible Loans, and
upon assignment by UFS-1 to the Trustee, its provisions may be enforced not only
by the parties to this Agreement but by the Trustee. The foregoing creates a
permissive right on behalf of the Trustee and the Trustee shall be under no
duties or obligations hereunder.
9
<PAGE>
This Agreement shall inure to the benefit of the Trustee and its
successors and assigns. Without limiting the generality of the foregoing, all
representations, covenants and agreements in this Agreement which expressly
confer rights upon the Trustee shall be for the benefit of and run directly to,
the Trustee, and the Trustee shall be entitled to rely on and enforce such
representations, covenants and agreements to the same extent as if it were a
party hereto. The foregoing creates a permissive right on behalf of the Trustee,
and the Trustee shall be under no duties or obligations hereunder.
If there is an Event of Default under the Indenture and the Trustee
forecloses on its security interest on the Education Loans, then the Trustee
shall assume all duties and obligations of UFS-1 hereunder, in accordance with
and subject to the Acknowledgment and Agreement re: Servicing Agreement among
the parties hereto dated of even date herewith.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
10
<PAGE>
IN WITNESS WHEREFORE, the parties hereto have executed this Agreement as
of the date first written above.
UNION BANK AND TRUST COMPANY UNION FINANCIAL SERVICES, INC.-1
By:/s/ Ross Wilcox By:/s/ Stephen F. Butterfield
- ----------------------- ------------------------------
Name: Ross Wilcox Name: Stephen F. Butterfield
- ----------------------- ------------------------------
(Please print) (Please print)
Title: CEO Title: President
- ----------------------- ------------------------------
11
<PAGE>
SCHEDULE "A"
A. Loan Origination Fee (Where Applicable).
Six Dollars ($6.00) per loan for Stafford, SLS and PLUS loan. Fifty-five
Dollars ($55.00) per loan for Consolidated loans (if applicable). In
addition, reimbursement for costs in the event a credit evaluation of
the borrower is to be performed by Union Bank.
B. Conversion Fee.
Five Dollars ($5.00) per account acquired by UFS and added to the Union
Bank Servicing System during the period of time the borrower is in
school. For periods of time other than when the borrower is in school,
the feel will be Ten Dollars ($10.00) per account. There shall be no
charge for loans already on the UNIPAC full servicing system.
Notwithstanding the foregoing, should any portfolio present an
"Extraordinary Conversion", requiring additional conversion services
materially beyond that customarily provided for a normal acquisition of
Education Loans, then UFS agrees to pay a conversion fee mutually agreed
to between UFS and Union Bank.
For purposes of this Agreement, whether a portfolio presents an
Extraordinary Conversion shall be determined after the data analysis,a
nd file review, have been conducted of the portfolio by Union Bank.
Factors to consider in determining whether a portfolio presents an
Extraordinary Conversion are as follows:
1. Unprocessed data.
2. Degree to which the conversion may be automated versus manual.
3. Integrity of the documentation. Are the files complete? Does the data
match the file content?
4. UFS adherence to its obligations and delivery schedules.
5. Presence of backlogged processing in the portfolio.
6. Whether prior servicing had substantial noncompliance with the
Education Act and Regulations.
7. Condition of the hard copy file documentation.
12
<PAGE>
After consideration of the foregoing factors, UFS and Union Bank agree
to come to mutual agreement at the beginning and once again at the end
of the conversion of a particular portfolio as to whether they need to
negotiate a mutually agreeable conversion fee.
C. Internal Transfers. Transfers from one customer identification number to
a different customer identification number will be One Dollar and Fifty
Cents ($1.50) per account transferred.
D. Monthly Servicing Fee - GSL (Stafford) Loans in School Status.
.90% annualized
E. Monthly Servicing Fee - GSL (Stafford, PLUS, SLS) Loans in Other Than
School Status.
1.25% annualized
F. Consolidated Loans.
0.60% annualized
G. Billing for Servicing Fees.
The full monthly servicing fee shall be paid commencing with the
calendar month an account is disbursed on or converted to the Union Bank
system.
H. Additional Servicing Activity.
Thirty-five Dollars ($35.00) per Education Loan referred for such cure
services, plus ten percent (10%) of all sums made eligible for
reinstatement of guarantee (including principal, interest and special
allowance) as a result of successful performance of the Cure Procedures
required by Guarantor. (This fee shall not apply to loans that have lost
their guarantee due to an error or omission of Union Bank.)
I. Minimum Monthly Fee.
There will be a minimum monthly fee of Seven Hundred and Fifty Dollars
($750.00) per month.
J. Removal Fee. Loans transferred off the Union Bank Servicing System
prior to termination of this Agreement will be assessed a fee of Fifteen
Dollars ($15.00) per account.
K. Deconversion Fee. Loans transferred off the Union Bank Servicing System
on or after termination of this Agreement will be assessed a fee of
Twelve Dollars ($12.00) per account.
L. Reconciliation of Guarantee Billing.
Eighty cents ($.80) per account for the first disbursement.
13
<PAGE>
M. PLUS (or Other Loan) Loan Credit Checks. Fees for obtaining a credit
bureau report and evaluation will be Two Dollars and Fifty Cents ($2.50)
per loan application. An additional fee of Fifty Cents ($.50) will be
charged for those applications in which written authorization must first
be obtained prior to pulling a credit bureau report.
N. Other Services
For services requested by UFS that are beyond the scope of those
described in this Agreement, the fees shall be assessed as follow:
(1) Supplies Cost Plus 15%
(2) Training $40.00 per hour
(3) Programming $70.00 per hour
(4) Consulting $80.00 per hour
Projects and services of this type shall be provided only after request
by UFS and after time and total cost estimate is provided by Union Bank.
O. Legal Opinions
Cost plus five percent (5%).
14
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
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0
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